Comparison Of Life Insurance And General Insurance: The term insurance is understood to mean a system in which insurance promises to compensate the insurer for loss, damage, death in return for paying the insurance premium. There are two types of contracts, life insurance, and general insurance.
An insurance plan that covers the life risk of the insured is called life insurance. On the other hand, an insurance plan that covers any risk other than a person’s lifetime risk is called general insurance.
Life insurance is also known as assurance, through which the sum insured is paid for the insured, while general insurance policies are called insurance. See the part of this article that covers all the essential differences between life insurance and general insurance.
Comparison of Life insurance and General insurance
| Base for comparison | Life insurance | General insurance |
| Money | Life insurance is defined as an insurance contract to cover a person’s lifetime risk. | General insurance refers to insurance not covered by life insurance and includes various types of insurance, such as fire, marine, motor, etc. |
| What is it? | This is a type of investment. | This is a compensation agreement. |
| The term of the contract | Long term | Short term |
| Payment of claims | The insurable amount is paid in the event of an insurance event or for maturity. | Losses will be compensated, or liability will be paid after the occurrence of an uncertain event. |
| Premium | The premium has to be paid year after year. | The premium must be paid in single digit. |
| Insurable interest | Must be a present at-the-time the time of the contract. | Must be present both at-the-time the time of the contract and at the time of the loss. |
| Policy value | This can be done for any price based on the premium the policyholder is willing to pay. | The amount of money payable as lifeless insurance is limited to the policy amount regardless of the actual loss or liability. |
| Submission | Life insurance contains a component of space savings. | There is no such savings element in general insurance. |
Definition of life insurance
The term life insurance refers to the type of insurance that covers the risk of life and provides a guarantee of indemnity by paying a certain amount after the insurer’s death or after a certain period.
In life insurance, the amount is payable in the event of an uncertain event. In addition, there are specific plans in which the amount of the policy pays off. (Comparison Of Life Insurance And General Insurance)
These are long-term contracts that require the payment of a lifetime premium until the sum insured is paid after maturity and its amount.
It can be surrendered a few years later, where the policyholder will receive a proportion of the premium paid, called the surrender value. (Comparison Of Life Insurance And General Insurance)
There are three types of life insurance, which are discussed below:
- Whole life guarantee: In a full lifetime guarantee, the policy amount is paid only after the insured person’s death to the nominee or the legal heir of the insured person.
- Term Life Insurance: In term life insurance, the policy amount is paid to the nominee if the insured expires before the specified term’s expiry or after the term’s maturity with the insured.
- Anniversary: The holder pays the policy amount as long as the insured survives when the policy expires.
Read More: What Is General Insurance And Types Of Insurance
Definition of general insurance
General insurance or non-life insurance or property and accident insurance is a contract that covers any risk excluding life risk. Insurance protects us and our property from valuables such as houses, cars and fires, thefts, floods, storms, accidents, earthquakes, and others. (Comparison Of Life Insurance And General Insurance)
These are compensation agreements in which the insurer promises to do better; the loss is to the victim. Thus, regardless of the policy amount, the insurance company will pay compensation to the insured.
These are of short-term nature, usually one year, and therefore require renewal every year. Types of general insurance are:
- Fire insurance: Insurance covers the risk of property damage due to fire. (Comparison Of Life Insurance And General Insurance)
- Marine Insurance: Insurance covers the risk associated with loss due to maritime adventures such as sinking, stranding, and collision due to the ship’s owner or cargo.
- Health insurance covers the health risk of the policyholder or his family members from accident or disease.
- Home insurance: Home insurance and its content from any uncertainty. (Comparison Of Life Insurance And General Insurance)
- Motor Insurance: Vehicle insurance is covered by motor insurance, divided into two heads, namely two-wheeler insurance and four-wheeler insurance. (Comparison Of Life Insurance And General Insurance)
Read More: What is life insurance? Types of life insurance
The main difference between life insurance and general insurance
The difference of life insurance and general insurance can be drawn on the following grounds:
- An insurance contract in which a person’s lifetime risk is covered is known as life insurance. In contrast, insurance is not covered by life insurance and includes various types of insurance, such as fire, marine, motor, etc. General insurance insurance (Comparison Of Life Insurance And General Insurance)
- Life insurance is nothing more than an investment opportunity. In contrast, general insurance compensation agreements.
- Life insurance is a long-term contract that lasts for many years. In contrast, general insurance is a short-term contract, which needs to be renewed every year.
- In life insurance, the sum insured is paid in the event of an event or after the maturity of the condition. In contrast, the amount of actual loss is paid in general insurance, or the liability will be paid after an uncertain event. (Comparison Of Life Insurance And General Insurance)
- In life insurance, premiums are paid for a lifetime. In contrast, in general insurance, one shot of premium is paid.
- In life insurance the insurable interest must-be present only at the time of the contract. However, in general insurance, the insurable interest must be present at the time of the contract and the loss.
- Life insurance can be taken out at any cost based on the premium payable by the policyholders. Regardless of the policy amount, the general insurance payable is limited to the amount of the loss. (Comparison Of Life Insurance And General Insurance)
- The conservation component is usually present in life insurance but not in general insurance.
Conclusion
In life insurance, the persons in charge assume liability under the current policy at regular intervals. (Comparison Of Life Insurance And General Insurance)
In general insurance, on the other hand, a portion of the premium is taken forward to provide for unforeseen liability, and the remaining amount is taken as profit on the false loss of claims and expenses.